Hoping to gain regulatory approval for the merger, SABMiller today said it would sell its 58 per cent stake in MillerCoors in the United States to its joint venture partner Molson Coors Brewing Company for about $12 billion.
Advertisement
SABMiller agreed to sell its majority stake in the MillerCoors joint venture in an effort to ease regulatory concerns that beer giant AB InBev would have a stranglehold on the US market after the merger.
AB InBev was known for producing beers like Budweiser, Stella Artois, Labatt, and Goose Island; SABMiller was known for Miller, Foster’s, Blue Moon, Peroni, and many others.
Approved by the board of SABMiller in October, the deal will be the fourth largest in history and the largest in British history.
Around 35% of annual cost savings will come from making changes in this area, but AB InBev said it expects that “key members of SABMiller’s management team and employees would play a significant role in the combined group”.
Africa is expected to see a sharp rise in people of legal drinking age and has a fast-growing middle-class developing a taste for branded lagers and ales rather than the illicit brews traditionally drunk.
This particular deal is worth $12bn (c£7.9bn) and is conditional on the completion of the SABMiller/AB InBev acquisition.
But Colley isn’t as bullish for shareholders of AB InBev.
One was if SABMiller’s two largest shareholders would accept an agreement.
ABI engineered a similar move in 2013, when it acquired Mexico’s Grupo Modelo for $20 billion. AB InBev’s offer for SAB comes in two parts: a £44 a share all-cash offer intended for most of SAB’s investors, and a mixture of unlisted AB InBev stock and a small amount of cash. The shares have gained nearly 40 percent since speculation about an AB InBev approach emerged two months ago. Analysts estimated 54 cents, on average. “This is a figure well below expectations, suggesting that pricing and distribution benefits may be the real driver of the deal”. It will almost double the company’s worldwide business.
“Our combination with SABMiller is about creating the first truly global beer company and bringing more choices to beer drinkers in markets outside of the U.S”, said AB InBev chief executive officer Carlos Brito. AB InBev will eventually merge into Newco and it will hold the combined group.
Advertisement
All this explains why AB InBev is pushing the deal through.
